A comfortable investment climate has been created in Crimea for both foreign and Russian investors
With so many hairballs happening all over the planet, what with dissonant stories stridently marketed from the Middle East, or games of nuclear chicken surrounding the Korean peninsula or flexing testosterone in the South China Sea. Little wonder that Crimea is relegated to being that lump in the kitty-litter of global geopolitics. Reportage is now about Donbass, Lugansk and the values of Kiev. If one looks at both sides of the narrative coin and carefully reads through the reportage, it is increasingly obvious that the re-integration of Crimea back into Russia is a fait accompli to all except those already in perpetual denial.
Just this weekend saw the conclusion of the third Yalta International Economic Forum that took place on the southern coast of the Crimea from April 20 to 22. This soiree saw more than two thousand people, including 220 foreigners from 46 countries in attendance. During those three days, more than 30 contracts valued at more than 100 billion rubles (approximately $1.8 billion) were signed.
Several innovative tools are being set up to ensure continued long term developmental interest in the Crimea, for example, trusts for the protection of foreign business have gone beyond discussion and are soon to be implemented. Foreigners and foreign companies, even those set up as local blind trusts, who make the investment decision in favor of the Crimea can rely on the full weight and support of the Russian government to assure smooth problem-free operation and repatriation of profits. It is important to recall that back in 2014 it was precisely against Crimea that sanctions were imposed.
One of the success stories of the post-sanctions implementation time was agricultural development in the Crimea region, where concessional lending instruments have seen noted use. Favorable credit instruments have been created for agriculture, there are also mechanisms to compensate farmers for their investment costs, i.e.; greenhouses, machinery, as they know that 70% of these invested funds will be returned to them through specific state aid.
As for social and similar capital-intensive areas of activity such as healthcare, developing resorts and recreation infrastructure, education and science will require more large-scale credit resources for appreciably longer periods than needed for agriculture. In this area progress continues and is supported by institutions such as the Russian central bank.
In other developmental areas, the Crimean Council Of Ministers designated a 41-acre plot in the spa resort called “Zhemchuzhina” near Yalta as the nation’s soon-to-be gambling zone. Tourism has long been a major source of revenues for Crimea, with local officials estimating that when it opens (est., 2017/2018) it could attract as many as 500,000 additional tourists a year and provide employment for up to 2,000 locals.
According to the chair of the Yalta International Economic Forum (YAEF) Andrei Nazarov, in a few years from now Crimea has the chance to become a kind of Russian Monaco. Over the past three years, a comfortable investment climate has been created for both foreign and Russian investors, as well as a free economic zone with truly unique conditions for Russia. Who knows, but in time, there may be additional reasons to set up personal or business interests in this Russian Monte-Carlo given the increasingly unfriendly dollar or Euro banking, privacy and tax conditions for investors that chose to hold such assets… Perhaps having Ruble assets is the answer for the not too distant future.
Paul Goncharoff is Chairman, Disciplinary Committee, National Association of Corporate Directors, Russia.
Anyone is free to republish, copy, and redistribute the text in this content (but not the images or videos) in any medium or format, with the right to remix, transform, and build upon it, even commercially, as long as they provide a backlink and credit to Russia Insider. It is not necessary to notify Russia Insider. Licensed Creative Commons.